Canada Feb. Industrial Product and Raw Materials Prices (Text)Ilan Kolet
The following is the text of the industrial product and raw material prices report as reported by Statistics Canada.
The Industrial Product Price Index (IPPI) rose 1.4% in February, led by higher prices for petroleum and coal products. The Raw Materials Price Index (RMPI) increased 2.2% as a result of higher prices for crude oil.
Industrial Product Price Index, monthly change
After remaining nearly unchanged in the last few months, the IPPI grew 1.4% in February, its largest advance since June 2008. Although petroleum and coal products were mainly responsible for the increase, all major commodity groups except meat, fish and dairy products were up.
The petroleum and coal products group (+6.6%) posted its largest gain since March 2011. Price increases were observed for most products, including gasoline (+8.3%) and diesel fuel (+5.6%). The increase in gasoline prices was partly attributable to reduced supply and higher world prices for crude oil. The IPPI excluding petroleum and coal products rose 0.6% in February.
Motor vehicles and other transportation equipment (+1.0%) also contributed to the advance of the IPPI in February, primarily as a result of higher prices for motor vehicles. The depreciation of the Canadian dollar against the US dollar was largely responsible for this increase.
Some Canadian producers who export their products report their prices in US dollars. Consequently, the 1.8% decrease in the value of the Canadian dollar relative to the US dollar may have the effect of increasing the IPPI. Without the measurable effect of the exchange rate, the index would have risen 1.0% instead of 1.4%.
Among the other commodity groups that contributed to the upward movement was primary metal products (+1.3%), specifically aluminum products (+2.5%), copper and copper alloy products (+2.7%) and other non-ferrous metal products (+1.0%). Prices for primary metal products have been fluctuating on a monthly basis since November 2012.
In contrast, meat, fish and dairy products (-0.3%) declined because of lower prices for meat products. It was the only major commodity group that decreased in February.
Industrial Product Price Index, 12-month change
Compared with February 2012, the IPPI increased 1.0%, after edging down 0.1% in January.
Compared with the same month a year earlier, the advance of the IPPI was largely a result of petroleum and coal products (+3.6%), specifically diesel fuel (+5.0%) and gasoline (+3.4%). The IPPI excluding petroleum and coal products was up 0.7% on a year-over-year basis.
With a 9.7% increase, lumber and other wood products also made a substantial contribution to the year-over-year increase of the IPPI. Higher prices for lumber and ties (+18.1%) were largely responsible for the increase. Prices for lumber and other wood products continued the upward trend observed since February 2012.
Motor vehicles and other transportation equipment posted a 1.0% year-over-year gain, mostly a result of the 1.3% depreciation in the Canadian dollar relative to the US dollar. Without the measurable effect of the exchange rate, the IPPI would have risen 0.7% instead of 1.0% on a year-over-year basis.
Among the other commodity groups that posted increases was fruit, vegetables and feeds (+2.3%), specifically feeds (+10.9%).
In contrast, the increase of the IPPI was moderated mainly by primary metal products (-3.8%). The largest year-over-year declines were in iron and steel products (-2.8%), aluminum products (-5.4%) and nickel products (-12.2%).
Raw Materials Price Index, monthly change
The RMPI rose 2.2% in February, the second consecutive monthly advance. All major product groups were up, except for non-metallic minerals.
The increase of the index was mostly a result of mineral fuels (+3.3%), particularly crude petroleum (+3.5%). The RMPI excluding mineral fuels was up 1.3% in February.
Upward pressure was also exerted on the RMPI by non-ferrous metals (+2.7%), which increased mainly because of higher prices for copper concentrates (+3.8%) and zinc concentrates (+6.2%).
Raw Materials Price Index, 12-month change
Compared with the same month one year earlier, the RMPI decreased 2.0%, continuing the downward trend that began in March 2012.
The decline of the RMPI was largely because of mineral fuels (-4.8%), specifically crude petroleum (-4.8%). The RMPI excluding mineral fuels increased 0.7% on a year-over-year basis.
Compared with February 2012, non-ferrous metals (-1.0%) were also down, primarily as a result of lower prices for radioactive concentrates (-15.8%) and precious metals (-6.3%).
The year-over-year decline of the RMPI was moderated slightly by vegetable products (+4.5%), wood products (+2.7%) and animals and animal products (+1.0%).
Note to readers
All data in this release are seasonally unadjusted and usually subject to revision for a period of six months (for example, when the July index is released, the index for the previous January becomes final).
The Industrial Product Price Index (IPPI) reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including the transportation, wholesale, and retail costs.
Canadian producers export many goods. They often indicate their prices in foreign currencies, especially in US dollars, which are then converted into Canadian dollars. In particular, this is the case for motor vehicles, pulp, paper and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI. But the conversion into Canadian dollars only reflects how respondents provide their prices. This is not a measure that takes the full effect of exchange rates into account.
The conversion of prices received in US dollars is based on the average monthly exchange rate (noon spot rate) established by the Bank of Canada, and it is available on CANSIM in table 176-0064 (series v37426). Monthly and annual variations in the exchange rate, as described in the release, are calculated according to the indirect quotation of the exchange rate (for example, CAN$1 = US$X).
The Raw Materials Price Index (RMPI) reflects the prices paid by Canadian manufacturers for key raw materials. Many of those prices are set on the world market. However, as few prices are denominated in foreign currencies, their conversion into Canadian dollars has only a minor effect on the calculation of the RMPI.